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Vol. 5 Issue : 4 June – August 2014

BCSBI News

With the admission of Bharatiya Mahila Bank Ltd., New Delhi and Mizoram Rural Bank, Aizawl as members of the BCSBI, the number of member banks of BCSBI stands at 128.

The Annual General Meeting of BCSBI was conducted on June 16, 2014 at the RBI Conference Room, Mumbai. The Chairman hosted the meeting along with Members of Governing Council and the Chief Executive Offi cer of BCSBI. The member banks were represented by their Principal Code Compliance Offi cers.

Chairman, BCSBI addressing the Member Banks at the AGM of BCSBI. Smt Rama Bijapurkar, GC Member and Shri N. Raja, CEO are seated at 1st and 3rd from left.

Welcoming the members Shri A.C. Mahajan, Chairman, BCSBI apprised the General Body the outcome of branch visits as well as responses from customers on Code implementation based on which the exercise of awarding ‘Code Compliance Rating’ to each member bank was carried out to assess the level of code compliance. He added that the level of compliance was grouped into four categories viz. High, Above Average, Average and Below Average based on the overall score of the bank. Apart from overall rating, bank-group wise position with the scores under five different parameters, viz. Information Dissemination, Transparency, Customer Centricity, Grievance Redressal and Customer Feedback were provided to banks to identify gaps and initiate corrective measures. This being the fi rst such exercise, it was decided not to place the individual bank results in the public domain. Members were informed that BCSBI may place the individual bank ratings in the public domain, in future.

A section of the participants at AGM of BCSBI.

Chairman explained that the Governing Council Members also interacted with the CMDs / CEOs of 16 banks, which could achieve only Average rating, in order to impress upon them the need for further strengthening their systems for Code compliance. Chairman hoped that all the member banks would tone up their systems and processes to ensure better compliance. Further, the Chairman, BCSBI; CEO and members of the Governing Council present at the Conference later interacted with the participants. Other awareness eventsBCSBI continued its efforts to spread awareness of the Codes amongst bank offi cials and customers – BCSBI organized a “Customer Meet” at Panaji on June 26, 2014. The Chairman and the Chief Executive Offi cer (CEO), BCSBI as well as Shri Hardayal Prasad, General Manager (GM), SBI, Local Head Office, Mumbai addressed the participants. At the inaugural address, GM, SBI conveyed that the principal objective of the meet organized by BCSBI was to make customers aware of their rights as mentioned in the Codes. In his keynote address, Chairman, BCSBI mentioned that BCSBI was set up to bring out Codes and Standards for banks to provide improved customer service in a fair and transparent manner. He said that the Code of Bank’s Commitment to Customers was last revised in January 2014 with new sections on Internet Banking, Financial Inclusion, etc. He advised the customers present to ensure that they obtain a copy of the Code from their banks. CEO, BCSBI gave a brief background of the evolution of BCSBI and said that BCSBI was formed to evolve standards for customer service and also monitor that banks follow these standards. He reiterated that all the commitments were of the banks to the customers and therefore the banks should be transparent in their dealings with customers and should make full disclosure. Various doubts raised by customers were clarified by the panel members. The meet was attended by over 200 retail customers of local branches of major banks operating in Goa.BCSBI organized a meeting of “Controlling Heads of Banks” in Chandigarh on July 15, 2014 to impress on the controlling heads the need to increase awareness of the Codes among

Shri A.C. Mahajan, Chairman, BCSBI addressing the participants at the meeting of Controlling Heads of Banks in Chandigarh. Shri N. Raja, CEO, BCSBI and Dr. R.R. Jariyal, GM, RBI, OBO, Chandigarh are seated at 1st and 2nd from left.

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CUSTOMER MATTERS June – August 2014

A section of the participants at the Customer meet held at Indore.

A senior offi cial from BCSBI participated in the customer awareness programme conducted by Banking Ombudsman at Kudal, Dist. Sindhudurg. BCSBI offi cials also participated in the Customer Awareness Meets organized by Canara Bank at Kolar (Karnataka) on June 26, 2014 and at Agra & Aligarh (UP) on July 23, 2014.

Shri P.S. Sharma, SVP, BCSBI addressing the participants at the awareness programme organized by Canara Bank at Agra.

IMPORTANT RBI INSTRUCTIONS ON CUSTOMER SERVICE IN BANKS

Reserve Bank (RBI) has been actively engaged from the very beginning in the review, examination and evaluation of customer service in banks. It has constantly brought into sharp focus the inadequacy in banking services available to the common person and the need to benchmark the current level of service, review the progress periodically, enhance the timeliness and quality, rationalize the processes taking into account technological developments, and suggest appropriate incentives to facilitate change on an ongoing basis through instructions/guidelines. Towards this end, RBI consolidates and updates, on an annual basis, all the important instructions issued on customer service in banks. The additional areas of customer service incorporated in the latest update relate to the following:-

Timely Issue of TDS Certifi cate to Customers With a view to protect the interests of the depositor and for rendering better customer service, banks are advised to provide TDS Certifi cate in Form 16A to the customers well within the time-frame prescribed under the Income Tax Rules.

Opening of Bank Accounts in the Names of Minors With a view to promote the objective of fi nancial inclusion and also to bring uniformity among banks in opening and operating minors’ accounts, detailed guidelines have been prescribed for banks.

offi cers, frontline staff and customers. The Chairman, BCSBI and the Chief Executive Officer, BCSBI addressed the participants from 31 member banks having their presence in and around Chandigarh. Chairman, BCSBI explained in brief the origin and purpose of setting up of BCSBI and its role. CEO, BCSBI highlighted the importance of putting in place systems and processes for compliance with Code provisions. Inclusion of new provisions relating to Electronic Banking, Financial Inclusion etc in the revised Code was also made known to the participants. The GM, RBI advised the participants to extend service to the customers with empathy and courtesy.

A part of the participants at the meeting of Controlling Heads of Banks in Chandigarh.

They also interacted with the participants and advised them to spread awareness regarding various provisions of Codes amongst their offi cers and staff during various in-house meetings, trainings and visits to branches in order to provide service to customers in the same spirit as enumerated in the Codes. BCSBI organized a “Customer Meet (Retail and MSE)” at Indore on July 28, 2014 to increase awareness of the customers about the banks’ commitments as contained in the Codes. The Chief Executive Offi cer, BCSBI, a senior offi cial of BCSBI and Zonal Manager, Bank of India, Indore Zone addressed the participants.

Shri N. Raja, CEO, BCSBI addressing the participants at the Customer meet held at Indore. Shri P.K.K. Krishnan, SVP, BCSBI is seated at 2nd from left.

The CEO, BCSBI explained to the gathering various customer rights enshrined in the Code, which are adopted by banks to protect the customers as well as to treat the customers fairly and in a non-discriminative manner. He also enlightened the participants on the precautions to be taken by them while using cards. The Zonal Manager illustrated the rationale for the Codes. They also interacted with customers of various banks to understand the problems faced by them. Around 300 customers from banks including an RRB having major presence in Indore participated.

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CUSTOMER MATTERS June – August 2014

Levy of Foreclosure Charges / Pre-payment Penalty on Floating Rate Term Loans Banks are not permitted to charge foreclosure charges / pre-payment penalties on fl oating rate term loans sanctioned to individual borrowers.

Uniformity in Intersol Charges Banks are advised to follow a uniform, fair and transparent pricing policy and not discriminate between their customers at home branch and non-home branches.

Charges for sending SMS AlertsWith a view to ensuring reasonableness and equity in the charges levied by banks for sending SMS alerts to customers, banks are advised to leverage the technology available with them and the telecom service providers to ensure that such charges are levied on customers on actual usage basis.

Providing banking facilities to Visually Impaired Persons Banks should ensure that all the banking facilities such as cheque book facility including third party cheques, ATM facility, Net banking facility, locker facility, retail loans, credit cards etc., are invariably offered to the visually challenged without any discrimination.

Claim Forms to be made availableWith a view to facilitate timely settlement of claims on the death of a depositor, banks are advised to provide claim forms for settlement of claims of the deceased accounts. Claim forms are also to be put on the bank’s website prominently so that claimants of the deceased depositor can access and download the forms without having to visit the concerned bank/branch for obtaining such forms for fi ling claim with the bank.

Some of the other existing instructions are :-

Customer Service: Institutional Framework Banks are required to constitute a Customer Service Committee of the Board to formulate policies and assess compliance with a view to bring about improvements in the quality of customer service. The Committee should also play a pro-active role with regard to complaints / grievances resolved by Banking Ombudsmen. Banks are also required to set up a Standing Committee on Customer Service as also establish Branch Level Customer Service Committee as a formal channel of communication between customers and the branch with greater involvement of customers.

Board approved Policies on Customer ServiceCustomer service should be projected as a priority objective of banks along with profi t, growth and fulfi lment of social obligations. Emphasis has been laid on the need for formulating various Board approved Policies on Deposit, Cheque Collection, Customer Compensation and Customer Grievance Redressal as well as providing wide publicity to these policies by placing them prominently on the web-site and also displaying them on the notice board in the branches.

Financial InclusionBanks have been advised to offer ‘Basic Savings Bank Deposit Account’, with minimum common facilities, use appropriate technology to extend banking outreach to remote corners to achieve the objective of fi nancial inclusion and make available all printed material used by retail customers including account opening forms, pay-in-slips, passbooks, etc., in trilingual form i.e., English, Hindi and the concerned Regional Language.

Opening / Operation of Deposit AccountsInstructions on the above cover entire gamut of opening and operating various types of deposit accounts; minimum balance, if any, in deposit accounts; issuance of passbooks / statement of accounts and details to be incorporated therein; issue of cheque books; time limit for reconciliation of transactions in case of ATMs failure; lodging of ATM related complaints; security issues and risk mitigation measures related to Card Not Present (CNP) transactions; securing Electronic Payment Transactions; etc. As a risk mitigation measure, banks have to put in place a system of on-line alerts for all transactions involving usage of cards.

Levy of Service Charges Banks have also been instructed to ensure that charges levied are reasonable. Banks should not levy foreclosure charge / prepayment penalty on fl oating rate term loans sanctioned to individual borrowers.

Guidance to customers and Disclosure of InformationBranches, except very small, should have ‘Enquiry’ / ‘May I Help You’ counters to assist \ guide the customers. Branches should also display information on customer service, service charges, grievance redressal procedure, etc in a Comprehensive Notice Board. Detailed information on the above, as also Policy documents on cheque collection, grievance redressal mechanism, security repossession and compensation, citizens’ charter for currency exchange facilities, Code of Bank’s Commitment to Customers, etc may also be made available in a folder for perusal of the customers.

Providing banking facilities to persons with disabilitiesBanks have been advised to provide ATMs with ramps so that wheel chair users / persons with disabilities can easily access them. Banks have also been advised to provide ramps at the entrance of the bank branches wherever feasible, talking ATMs with Braille keypads to facilitate use by persons with visual impairment, etc.

RemittanceBanks have to ensure that remittance of funds by demand draft /mail transfer or any other mode and issue of travellers’ cheques for value of ̀ 50,000/- and above is effected by debit to customer’s account or against cheque and not against cash payment. Banks should ensure that demand drafts of `20,000/- and above are issued with account payee crossing. In case of remittance through electronic funds transfer, originating banks should provide the option to the customer to choose between RTGS and NEFT system at the time of initiation of the funds transfer. All banks should put in place appropriate mechanism to ensure that positive confi rmation is sent to the remittance originator confi rming the successful credit of funds to the benefi ciary’s account when funds are transferred through NEFT. In case of delay in crediting the benefi ciary customer’s account or in returning the uncredited amount to the remitter in case of NEFT, banks should pay penal interest.

Cheque Drop Box FacilityBoth the drop box facility and the facility for acknowledgement of the cheques at regular collection counters should be available to the customers and no branch should refuse to give an acknowledgement if the customer tenders the cheques at the counters. The banks are also advised to make fool proof arrangements to account for the number of instruments each

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CUSTOMER MATTERS June – August 2014

On behalf of the Banking Codes and Standards Board of India edited, printed & published by P. K. Agrawal. Printed at Alco Corporation, A1/418A, Shah & Nahar Industrial Estate, Lower Parel (W), Mumbai 400 013 and published at Banking Codes and Standards Board of India, C-7, Reserve Bank of India Building, Bandra Kurla Complex, Mumbai 400 051.

time the box is opened so that there are no disputes and the customer’s interests are not compromised. Dealing with Complaints and Improving Customer

Relations Banks are advised to ensure that there should be a suitable mechanism to receive and address complaints from the customers. Branches should prominently display at the branches, the names of the offi cials who can be contacted for redressal of complaints, together with their direct telephone number, fax number, complete address and e-mail id, etc., for proper and timely contact by the customers and for enhancing the effectiveness of the redressal machinery. Complaints / suggestions box should be provided at each offi ce of the bank. Further, at every offi ce of the bank a notice requesting the customers to meet the branch manager may be displayed regarding grievances which are not resolved. Complaint book with perforated copies in each set may be introduced, to instantly provide an acknowledgement to the customers and an intimation to the Controlling Offi ce. For detailed information please refer to RBI Master Circular on Customer Service in Banks issued in July 2014.

EXEMPLARY CASES ABC was maintaining four FDRs with a bank. He alleged that the bank had delayed the credit of the maturity value of his FDRs into his savings bank account. The bank offi cials said that the maturity date was falling on a non-working day (i.e. holiday) and the subsequent day was the last date of their fi nancial year. Transfer of funds i.e., the maturity value of FDRs through RTGS failed due to poor connectivity in the branch as there was rush of transactions on that day.

It was observed that in this case the maturity of term deposit fell due on holiday and the bank could not credit the maturity value of FDRs even on the succeeding working day. In the circumstances, the bank was directed to pay the interest at the FD rate for the period of delay in crediting the maturity value. Accordingly, the bank credited the interest amount for three days to the complainant’s account. [Source : Annual Report 2013-14, BO, Guwahati]

XYZ customer of a bank alleged that bank had deducted an amount of `27,578/- from his savings bank account. The bank said that the wife of the customer had taken a loan against two existing Fixed Deposits in the year 1998. But the wife of the complainant stated that neither she nor her husband had availed loan against any fi xed deposits. On receipt of complete details of the loan it was found that the loan was taken against fi xed deposit receipts. In a loan against FDRs, the discharged FDRs were handed over to the banker with the understanding that the loan would be automatically liquidated by premature closure of FDR as soon as outstanding amount in loan equalled the surrender value of FDRs. It was observed that the loan was liquidated in July, 2010 whereas FDRs had matured in 1999 and 2001. The bank had not followed the normal banking practice in the instant case and had wrongly debited the amount of `27,578/- which needed to be refunded to the complainant. The bank was directed to credit to the customer’s account the entire amount they had

debited, as per the Award passed by the Banking Ombudsman. [Source: Annual Report 2013-14, BO, Guwahati]

DID YOU KNOW?In continuation of the guidelines / instructions issued by RBI in March 2014 on establishment of the Depositor Education and Awareness Fund (DEAF), RBI has advised that a banking company shall be liable to repay a depositor or any other claimant, claiming his deposit or unclaimed amount, at such rate of interest as may be specifi ed by the Reserve Bank in this behalf. In terms of Section 26A(3) of the Banking Regulation Act, 1949 where a banking company has paid such amount or allowed operation of such account or deposit, such banking company may apply for refund of such amount from the Fund. Accordingly, Reserve Bank has specifi ed that the rate of interest payable by banks to the depositors/ claimants on the unclaimed interest bearing deposit amount transferred to the Fund shall be 4% simple interest per annum until further notice, by rounding off the amount of interest to the nearest rupee.

READERS’ VOICE

What are RBI instructions / guidelines for residents and non-residents to take out Indian Currency notes?

In view of the evolving economic conditions and with a view to facilitating travel requirements of residents travelling aboard as well as non-residents visiting India, RBI has decided in June 2014 to allow all residents and non-residents (except citizens of Pakistan and Bangladesh and also other travellers coming from and going to Pakistan and Bangladesh) to take out Indian currency notes up to `25,000 while leaving the country. Accordingly, any person resident in India:i) may take outside India (other than to Nepal and Bhutan)

currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding `25,000 (Rupees twenty fi ve thousand only); and

ii) who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding `25,000 (Rupees twenty fi ve thousand only).

Any person resident outside India, not being a citizen of Pakistan and Bangladesh and also not a traveller coming from and going to Pakistan and Bangladesh, and visiting India:i) may take outside India currency notes of Government of

India and Reserve Bank of India notes up to an amount not exceeding `25,000 (Rupees twenty fi ve thousand only) while exiting only through an airport.

ii) may bring into India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding `25,000 (Rupees twenty fi ve thousand only) while entering only through an airport.

Would you like to share any information/experience connected with customer service? If so, please feel free to write to us at C-7, RBI Building, Bandra-Kurla Complex, Mumbai-400051 or mail us at ceo.bcsbi@rbi.org.in